TPR has published a substantial consultation on revisions to the Funding Code for final salary schemes. This is significant for trustees and sponsoring employers of DB schemes who should be aware of the proposals. Following this consultation, TPR will consult on the new Funding Code later this year and it is expected that it will come into force during 2021. TPR wants the new Code to be clearer and more readily enforceable.
The Code envisages a ‘Fast Track’ and a ‘Bespoke’ approach to compliance. The Fast Track is likely to be more prescriptive and, potentially, out of reach for many schemes. The alternative Bespoke approach will require Trustees to justify why they are not following the Fast Track model and fully document their decisions.
Trustees will be required to provide detailed evidence and information to support their funding and investment strategy. Adopting the Bespoke approach is likely to involve additional costs and the fear is this will put more pressure on those smaller schemes where additional costs can be disproportionate.
The full consultation is over 170 pages long so TPR has produced a more manageable ‘Quick Guide’ of only 15 pages, which you can find here: Funding Code – Quick Guide. The full consultation can be found here: Full Funding Code Consultation. The consultation closes on 2nd June (although this may change). Atkin will be responding to the consultation and would be happy to include your views in our response.